House Bills 4900, 4901 would shield homes, wages, and public benefits from excessive collections
LANSING, Mich. (Dec. 23, 2024) — The Michigan Legislature has passed House Bills 4900 and 4901 to ensure that Michigan residents are not pushed into poverty by creditors. Rep. Kara Hope (D-Holt) sponsored House Bill 4900, which would update consumer debt garnishment exemptions for wages, homes, vehicles, and tools of the trade to reflect modern values. It would also prevent debt collectors from intercepting Earned Income Tax Credit (EITC) public benefits intended to support vulnerable families. Rep. Brenda Carter (D-Pontiac) sponsored House Bill 4901, which would ensure that people who own modest homes can protect them in bankruptcy. Sen. Jeff Irwin (D-Ann Arbor) and Sen. Mary Cavanagh (D-Redford Twp.) sponsored the Senate versions of the bills, Senate Bills 408 and 409, which did not pass both chambers as the House bills moved instead.
“It’s counterproductive for a creditor to take so much from a person that they lose their housing or their transportation to work,” Sen. Irwin said. “That sort of excessive seizure interferes with people’s ability to pay their debts and may force them to rely on public benefits. But current exemption amounts haven’t been updated in generations, severely eroding their usefulness. I worked to negotiate this legislation with a wide range of stakeholders so that it will provide a healthy balance for our state.”
“Bankruptcy is an important function of our economic system. Unfortunately, it does not currently serve its purpose when individuals are left destitute after the process — losing their home and transportation, along with the means to sustain themselves,” Sen. Cavanagh said. “The current homestead exemption law protects just over $46,000, less than one-fifth of the price of a median home in our state. It is vital to increase bankruptcy exemptions to reasonable amounts so Michiganders going through a hard time still have the capacity to keep their homes and participate in our society and economy.”
“I am proud to have been part of the legislative majority that increased the Earned Income Tax Credit for working families in Michigan,” Rep. Hope said. “That money is a publicly funded benefit. It is meant to buy kids’ winter boots and put food on the table; it should not be going straight into the pockets of debt collectors. Yet, this year, more than 50,000 Michigan households had their EITC intercepted. This legislation will exempt EITC from interception to collect consumer debts.”
“Families must struggle generation after generation when they are rendered homeless by a bankruptcy homestead exemption that is too low to protect their housing or the savings they have invested in it over a lifetime,” Rep. Carter said. “I have seen how my community has been disproportionately harmed by debt garnishment and excessive debt collection practices. This legislation will help families get back on their feet, so that they are not forever disadvantaged by a financial setback.”
“A broad coalition supports one or both of the bills in this package, from Pew Charitable Trusts to CEDAM to the Christian Coalition,” Sen. Irwin said. “We hope that Gov. Whitmer will move swiftly to sign this bill into law for the people of our state.”
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